It has to be the end because the unthinkable has happened: the price for WTI oil went negative! An industry accustom to extracting riches from nations is now facing a glut of oil, and t
he capitalist regime with its hands in the peoples' pocket has promised to bail out the oil companies. On Monday WTI oil futures crashed to
a historic $-40.32. Monday's price busted the previous low of $10 a barrel set in 1986, ending a decade long oil boom. There is no excess storage capacity for landlocked crude like WTI, so sellers were paying buyers to take excess oil off their hands. The regime is allowing companies to lease storage capacity from the Strategic Petroleum Reserve, but private production is adding 2 million barrels a day to private storage. Even the government's buy of 75 million barrels to top off the Reserve will provide little immediate relief. Brent crude, the international price standard, has not gone negative because excess production can be stored in tankers.
Oil market analysts think the historic price drop is
primarily a function of market oversupply caused by a price war between Russia and Saudi Arabia, both countries that rely heavily on oil production to finance their national budgets. The drop in demand due to pandemic lock downs only exacerbates the negative market conditions. Future prices for June contracts are still positive. OPEC has agreed to a production cut that will not take effect until May 1at.
